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Summary:

Path, the San Francisco-based company that makes a photo sharing app has raised $8.5 million in new investment from KPCB and Index Ventures. That’s a lot of money for a company that has little traction or not even a hint of a business model.

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Path, the San Francisco-based company that makes a photo sharing app has raised $8.5 million in new investment from Kleiner Perkins Caufield & Byers and Index Ventures along with Digital Garage of Japan. The company co-founded by ex-Facebooker Dave Morin and Napster co-founder Shawn Fanning has raised a total of $11.2 million in venture capital. That’s a lot of money for a company that has yet to gain any visible traction or even have a hint of a business model.

I personally have a terribly low opinion of the application and the service, which has been thoroughly thrashed in the market by the likes of Instagram. The company has done nothing to really change my mind. Path’s unique selling proposition is that it allows you to share photos privately with 50 of your close contacts – friends and family so to speak. Since their initial launch, the company has launched ability to share 10-second video clips. The photos, videos and text are shared as “moments.” The company claims hundreds of thousands of users who have shared 2 million moments. Assuming there are 100,000 Path users, then that works out to about 20 moments per user. And if there are 200,000 users, the number declines to 10 moments per user. That’s not a lot of activity on the system.

On the other hand, now that Path is allowing you to share moments via emails — maybe there will be growth! And yes, I am being cheeky!

  1. The fact that you would compare Path to Instagram means that you just don’t get the product.

    Path isn’t trying to disrupt any of the other sharing services, it’s created an entirely unique experience where real friends can share personal moments that matter – or moments that don’t matter. The experience is as much shaped by its confines and economy of design as it is by the people that use it.

    I think Path is a lot like Twitter, once you figure it out it just makes sense. Evidently not all of us have figured it out yet.

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    1. Hmmm. I don’t know. I think that people should just be able to quickly (instantly?) “get” a simple service such as Path. I mean what is there to get? I think that people are just underwhelmed with its limited functionality and differentiation from other sharing services. That is why people don’t get it. I understand the concept of economy of design, but that only matters if you can get people to try and use the service in the first place. That is where an interesting, compelling, and differentiated value proposition is critical. Usability just doesn’t matter if the value prop is not strong enough to motivate people to want to try it initially. They are obviously smart guys so maybe they will be able to pivot or make it more compelling, but I agree that it seems like a lot of funding for what they have built.

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  2. I understand betting on the team and not the company, but how do intelligent executives in charge of a lot of money believe in this? I’m sure they have their set user base of early adopters, friends, friends of friends, and family. Perhaps they are showing growth (until that friends and family circle runs out of friends and family to share with). However in all reality how is Path’s offering ever going to be mainstream? I don’t care about sharing with just 50 people and most people I know feel the same way. For the most part Facebook does everything I want it to do.

    Perhaps the Kevin Rose’s and Tim Ferriss’ of the world may want to keep just 50 friends since everyone in the tech world seems to want a piece of them, but for the rest of us why on Earth would I want to limit my friends to 50 people? Maybe I live a boring life because I don’t run naked in fields and take pictures of me and my friends smoking 420 or the other “adventurous stuff” that warrants restricting my social network circle to just 50 people.

    Thanks for your honesty Om. Every other tech blog seems to suck up to supposed “hot startups” when celebrity techies get funding from celebrity VCs.

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    1. Ash is on point.., great response. No one likes exclusivity.

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  3. Hi Om,

    I think Instagram and Path are very different services, mainly that the former is asymmetric (like a Twitter for pictures) and Path is entirely symmetric with strict limits on networks, interaction, etc. Additionally, I believe the two million “shared moments” is from a very limited Alpha (iOS only). Finally, I don’t think investors worry about funding entrepreneurs on their second go around if they don’t have a business model yet. The Series A investment is likely a sign that it was a good time for them to raise the money, and they probably had a choice of firms to pick from. My best guess.

    Semil

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  4. Anyone who’s tried to get money for a sound idea and failed should know the answer to the “why”. It’s who you know that matters most. I’d probably bet on them too.

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  5. I agree with you completely Om. $8.5 million is a lot of money. Why do they even need so much? It is a very competitive space and Path does not have the traction to justify such a large investment.

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  6. All hail the new bubble, son of the old bubble!

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  7. Shyam Subramanyan Tuesday, February 1, 2011

    There’s something to a limited network that is attractive. On Facebook for example, I have a smaller family group that I post more often to share “moments”. A lot of these “moments” posts would be irrelevant to casual friends and colleagues who are in my Facebook friends list.

    Something like a Path would be interesting in the same way, but the service is not yet useful to me since only a small percentage of the 50 in my circle use the iPhone. They can also potentially allow me to have named groups of fifty each – say “family”, “geek friends”, etc. My guess is that their best ideas are yet to come…

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    1. I see the appeal of Path. In fact, many of my friends and family want a more intimate place to communicate as a Group. Yes, you can use Facebook for groups but then you have to deal with all of the security issues and fake ‘friend’ requests that go along with being a Facebook member. I’ve used Path but it is very limiting. I am interested in sharing more than a moment in time with the important groups in my life. I think social private group services like YapTime which allows the group to share photos, videos , files and calendars will appeal to a much broader audience.

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    2. I see the appeal of Path. In fact, many of my friends and family want a more intimate place to communicate as a Group. Yes, you can use Facebook for groups but then you have to deal with all of the security issues and fake ‘friend’ requests that go along with being a Facebook member. I’ve used Path but it is very limiting. I am interested in sharing more than a moment in time with the important groups in my life. I think social private group services like YapTime, MicroMbs which allows the group to share photos, videos , files and calendars will appeal to a much broader audience.

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  8. So if the service is just mailing photos and videos to a select list, can somebody expand on why people can’t just use a mail list? What is the big advantage over any photo/video sharing site? And who wants to get photo and video attachments in email (especially when so many people get email on their bandwidth limited phones)? Regardless of the lack of business model, what is the value to the user?

    I’m calling laziness on the part of KP. They can’t be this foolish. Or is it the result of a bet, like the movie Trading Places, to prove that people will fall for anything that is pushed by the VC/SV hype machine?

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    1. It’s not a mailing list at all… You clearly have no experience with the app or even a general familiarity with the product at all. Best you actually learn what Path is before you condemn it as VC hype.

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      1. Jeff, I didn’t say it was a mailing list, I asked what does it do that a mailing list can’t do.

        If you can’t tell me what’s so great about it, why will millions of people start using it? Yes, I have no familiarity with it, and I tried to learn what it is, but did not want to invest a whole lot of time learning it. So tell us, what is so great about it?

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      2. @KenG, the idea of Path is actually pretty elegant. If we take the word Path as an analogy, then we can see that Path encourages you to share moments on your life path.

        Where the service excels is in its intimacy. Unlike social networks like Facebook, where there is a hesitancy to share, the small-scale base for Path encourages sharing in a different way. Personally, I find myself sharing pictures or videos on Path that I would never post to Twitter or Facebook, or picture-sharing sites like Instagram or Flickr.

        Furthermore, these guys actually did a lot of research about the ideal number of friends. Their research found that you only ever have a few good friends in your circle at any one time, and that, at a maximum, you can only be actively engaged with 50 people at a time. In other words, Path’s constraints actually encourages you to seek out your closest friends, and then provides an environment that encourages sharing and interaction based on that sharing.

        To specifically answer your question, a mailing list does not utilize geo-location data, it does not show you who viewed your photos (unless you use some sort of analytics, which is way beyond what 99% of users would do), and it does not easily allow you to look back through your pictures and your friends’ pictures easily. Other than that, I can’t really explain it to you: much like Twitter, it only makes sense when you try it.

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      3. Jeff, Uhh, OK. Is that their elevator pitch? That gets them into the office of a tier 1 VC so they can show them how great it is?

        I buy the premise about not needing to share everything with a giant list of people (which is why I don’t use FB or twitter). But as a recipient of emailed photos and videos, I consider the sender knowing if I have looked at them an invasion of privacy (and I’m relatively transparent), even though I pretty much look at all photos and links to videos people send me (I would rather only receive links anyway).

        And geolocation is not available on every camera (my phone doesn’t always tag each photo with the location, even though it is configured to) – but in any case, when I upload the photo to a sharing site (I use picasa and smugmug), the gps coordinates are available for each photo or video that contains the information. And I only have to send a link. And anyone I have sent that link to can view all my old photos very easily.

        Sorry. Not impressed, although admittedly, I am not part of the target market.

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  9. I think there is no way this service would have raised so much without the core founding team behind. The product is nicely executed but i am with you om. i see low value in it. i bet 100% it will pivot and extend to public sharing in a more compelling way than just email…

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    1. Yep
      I totally agree with you Ouriel.
      They must have understood something by watching their users that we do not get yet and they are preparing to pivot to something bigger.
      iPhone developers are not THAT expensive!

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  10. I could see how something like Path could be extremely valuable to the porn industry. Imagine how much people would pay to be one of 50 exclusive followers and see their favorite star’s “moments” shared… At least that’s a proven business model.

    Time to pivot, Path?

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